Friday, March 7, 2008
Dear International Living Panama Roundtable Member,
Yet another sign of Panama’s economic boom is the burgeoning hotel industry. More and more people are visiting Panama—tourists, businesspeople, retirees, investors, seminar attendees, and more—and there is a serious lack of hotel space. This situation spells an important potential business opportunity for anyone willing to start a hotel here.
If you are visiting here soon and concerned about being able to get a room, don’t be…help is on the way. In an effort to meet the rising demand, thousands of hotel rooms are being added over the next two years.
In 2007, Panama’s Tourism Institute (IPAT) approved 48 hotel projects. Some $664 million will be spent to up the number of rooms available from about 17,000 to over 24,000. Over half of the new rooms will be in Panama City, where the demand is greatest.
Here’s what we know so far about some of the new hotels you can look forward to visiting by 2010:
- Crystal Tower, a $170 million project by Spanish group Gesmar, will be located on Panama City’s Balboa Avenue (on the Bay of Panama) and will also feature residences
- Hotel Balboa Park will cost an estimated $90 million. The 112-room hotel will be located in the same area as Crystal Tower
- Megápolis is a hotel project by the same group responsible for the Radisson Decapolis, one of Panama City’s most popular new hotels. This "condo-hotel" will boast 3,145 rooms as well as a to-be-determined number of condos
- In April of this year, InterContinental Hotels Group (IHG), the world’s largest hotel group, is opening the Holiday Inn Panama Canal and The Panama International Hotel School in collaboration with local affiliate Bern Hotels & Resorts. The $12 million investment consists of a 137-room hotel plus educational institute in the City of Knowledge, a complex housing education, technology, information, non-profit, and research companies. It will be the fourth IHG hotel in Panama
- Starwood Hotels & Resorts Worldwide Inc. will open a Le Méridien hotel in Panama with the aim of extending this European brand throughout the Latin American market. Bern Hotels & Resorts Panama is responsible for bringing the franchise here. The new hotel, slated for 2009, will have 118 rooms
- Nikki Beach is planning to build the Panama Canal Hotel and Spa on the Amador Causeway in Panama City. The hotel and resort giant already has one development in Panama, in the Pacific beach community of Playa Blanca. Nikki says construction on the resort and residences in Amador will be complete by 2009
- Spanish group H Top recently announced it too is planning not one, but two hotels—a 400-room hotel in Panama City’s Amador area and one in Colon’s Panama International Merchandise Mart (PIMM).
In addition to these new hotels, existing hotels are expanding. For example, Marriott Panama is investing between $8 and $10 million and adding 77 new rooms, and the Gamboa Rainforest Resort is spending $3.5 million to add 58 new rooms.
Some of the world’s largest hotel and resort chains are already in Panama, including Marriott, Holiday Inn, Sheraton, Intercontinental, Radisson, Wyndham, among others.
New hotels are good news for the economy and for the job market. Estimates indicate that new hotels will generate about 2,800 jobs by 2010. And the new hotels are practically guaranteed occupancy. Hotel occupancy in the first half of 2006 averaged over 78% for large hotels (with 100 or more rooms). In the first half of 2007, occupancy increased by about 20%, and on weekends in Panama City, occupancy is close to 100%.
"There are dates on which there are no hotel rooms available," says Jorge Loaiza, president of the Panama Hotel Association (APATEL). Now is one of those times. Expocomer, Panama’s annual international trade expo, began on March 5 and runs until March 8. It’s expected to attract over 17,000 foreign visitors; hotels were sold out for these dates long before the event.
If you’re planning on getting a piece of the action by opening your own hostel, motel, B&B, hotel, or any other type of lodging…I’d suggest you act quickly. In addition to all the hotels approved by IPAT last year, about 18 are currently undergoing the approval process. There’s no telling how many more groups will apply for hotel permits in 2008…especially considering the special incentives Panama offers.
Law No. 8, known as one of the most modern and comprehensive laws in the region for the promotion of tourism investment, offers significant tax exemptions for tourism projects in "Special Tourism Zones" (STZs), including a 15-year income tax exemption, varying property tax exemptions, and a 20-year exemption from import taxes on construction materials and equipment. Add to this low labor costs and a large bilingual workforce, and it’s easy to see why Panama’s a draw for hoteliers.
Best regards,
Jessica Ramesch
Editor, Panama Insider
IL Panama Roundtable News
